This week's Pre-Budget Report held few surprises and included the expected windfall tax on bank bonuses. Key impact on Ltd Company contractors appears to be:
· Small companies corporation tax rate - remaining at 21% for a further year, which is good news.
· National Insurance increases from 6 April 2011 - the main rates of NIC will be increased by an additional 0.5% over and above the rate increases announced in the Pre-Budget Report 2008. The increased rates will be Class 1 main rate NIC 12%; Class 1 employer rate 13.8%.
· VAT flat rate scheme changes - the flat rate scheme percentages are to be revised to reflect the reinstatement of the 17.5% VAT rate on 1 January 2010. However, the rates will not return to those used prior to the December 2008 change to 15% VAT. A new table of rates should be available soon on HMRC's web site.
Finally, there is a paragraph hidden away in the supplementary pages of the press release announcing a consultation on 'Travel schemes' that "take advantage of the tax and National Insurance expenses rules relating to travel to a temporary workplace." It looks as though HMRC and BIS are going to have another go at what they consider to be abuse of expense rules by umbrella companies. Watch this space!